Why Buy?

Despite the precipitous fall in real estate values that has occurred over the past five years, real estate has still outperformed the stock markets. It seems that what has really happened is that the “sure-thing” mentality derived from years upon years of appreciating values lured the public into an unrealistic expectation of non-stop appreciation… no-risk gain. As with all markets, there will be ups and downs… Real estate is no different from any other investment in that regard. Even so, when you look at true performance year-over-year, it has out performed most other investment options available to the general public.

Now I don’t want to discount the financial reasons to buy… It’s just that they aren’t the major reason for buying. Even so, let’s take a look at what the record actually shows about the value of real estate as an investment and what the financial experts have to say.

As the Oracle of Omaha, Warren Buffett, believes and does… He buys to hold. He looks at the intrinsic value of any option before investing his hard earned cash and then buys to hold for the long-term. He shuns the short-term view, as should most investors. The short-term, often highly dependent on market timing, will always be higher risk and require greater skill (and perhaps luck) to be successful.

I’ll continue this discussion in my next column… until then…

May the market be with you.

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